Consolidation notes

The amendments should be applied prospectively to plan amendments, curtailments or settlements that occur on or after 1 Januarywith earlier application permitted.

consolidated financial statements

Lessors continue to classify leases as operating or finance, making IFRS 16 approach to lessor accounting, substantially unchanged from its predecessor, IAS The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity.

The amendments clarify when an entity should transfer property, including property under construction or development into, or out of investment property.

Consolidation of associates example

Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. Note although we refer to this as a provision, it is not a liability but an adjustment to the asset, inventory. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. IFRS 16 requires lessees to recognise nearly all leases on balance which will reflect their right to use an asset for a period of time and the associated liability to pay rentals. As from 1 January , the revenue and costs from the German Argen will be included on a net basis in the result from joint ventures. Under existing rules, lessees generally account for lease transactions either off-balance if the lease is classified as operating lease or on balance if the lease is classified as finance lease. Gains or losses on disposals to non-controlling interests are also recorded in equity. They are deconsolidated from the date that control ceases. During the first quarter of the Group will continue to update the lease data for the fourth quarter of , thus calculating the final impact on the opening balance of The adoption of these amendments did not have any impact on the current period or any prior period and is not likely to affect future periods. Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. This is because the consolidated statement of profit or loss needs to show revenue and costs of sales which reflects group performance with external, non-group, entities. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS

In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. Furthermore, while reviewing policies regarding Joint Arrangements, the Group has decided to present the results from share of investments including impairments in the Operating result as from given the similar nature of the activities of the investments concerned with the activities of the Group.

exemption from consolidation of financial statements

Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Gains or losses on disposals to non-controlling interests are also recorded in equity.

Scope of consolidated financial statements

This may mean that amounts previously recognised in other comprehensive income are reclassified to the profit or loss. The amendments specify that current service cost and net interest for the remainder of the annual reporting period after a plan amendment, curtailment or settlement are determined based on updated actuarial assumptions. The parties to the arrangement have agreed contractually that control is shared and decisions regarding relevant activities require unanimous consent of the parties which have joint control of the joint venture. As from 31 December , on a prospective basis, the Group will classify the Argen as Joint Ventures to fully align with interpretations from German Audit Profession. Joint ventures are joint arrangements whereby the Group and other parties that have joint control of the arrangement have rights to the net assets of the joint venture. The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. However, the Group considers the expected impact as per 30 September as a reasonable representation of the expected impact on the opening balance The adjustment would be: Dr. Key accounting choices The Group has chosen to use the following exemptions proposed by the standard: non-lease components: non-lease components are not separated from lease components and instead each lease component and any associated non-lease components are accounted for as a single lease component. As disclosed in note The Group applies the acquisition method to account for business combinations. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in the income statement. Total impact on the retained earnings is expected to be nil as a result of applying the modified retrospective transition approach option 2. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

They are deconsolidated from the date that control ceases. The adjustment would be: Dr.

Notes to consolidated financial statements

As the lease payments excluding interest will no longer be considered as operating cash flows but as financing cash flows, the operating cash flows reported in the consolidated cash flow statement as of will be positively affected, while the financing cash flows will be negatively affected. The identified leases mainly relate to offices, company cars and equipment. As from 31 December , on a prospective basis, the Group will classify the Argen as Joint Ventures to fully align with interpretations from German Audit Profession. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IFRS 9 either in the income statement or as a change to other comprehensive income. During , processes have been redesigned, an accounting tool to account for IFRS 16 has been implemented and staff has been trained in the application of IFRS The amendments should be applied prospectively to plan amendments, curtailments or settlements that occur on or after 1 January , with earlier application permitted. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in the income statement. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Total impact on the retained earnings is expected to be nil as a result of applying the modified retrospective transition approach option 2. Furthermore, in the consolidated statement of cash flows, the change in Cash and cash equivalents with respect to this presentation change is separately presented. Unrealised losses are also eliminated.

Total impact on the retained earnings is expected to be nil as a result of applying the modified retrospective transition approach option 2.

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Lecture 7: Complex Group Structures